Once the preferred destination for trousers, shirts and ‘technical’ garments like jackets and sportswear, the Bangalore garment manufacturing industry is now undergoing a transformation with increasing emphasis on product development and smaller quantities. Always considered as the most professional garmenting hub and home to many migrant companies from Mumbai and Delhi, the city has faced some serious ‘resource’ issues in the last two years with labour shortage being the most crippling… This and the rise in cost of operations have led many companies to expand into newer locales on the outskirts and even outside the state. The changing mood is visible and technology providers corroborate investment in value adding technologies and factories outside the city.
It would be unfair to say that Bangalore never had companies that made fashion, but what is universally known is that a majority of the companies are involved in large-scale productions of core programs with skilled workers for structured categories. In a survey conducted by Apparel Online a few months back, 93% of the buyers said that they went to the city to source bottoms and basic garments, another 70% ranked Bangalore as top manufacturing base on scales while 32% of the buyers ranked it as ‘poor’ on small quantities. Yet, today many companies are re-looking at their strategy, reworking on their business model to accommodate ‘fashion’ for better balance of product basket.
Garment manufacturers are of the view that with buyers demanding more value additions, it has become imperative for companies to move beyond basics, which could be the strength of our manufacturing bases. “Business for us is good as we are putting a lot of stress on product development; I guess that is the call of the day. If someone is not spending on development they will be losing out as now Bangladesh is not the only threat for us, a lot of new countries like Cambodia and Myanmar are strongly coming up as volume manufacturers, so the only differentiator is the product development,” says Vinit Mehta, Vice President, Golden Seam, a company which has established its credibility on fashion casual bottom wear.
With an in-house facility for stitching, hand and computer embroidery, washing, garment and pigment dyeing, printing, etc., fashion integrated Go Go International, which is known for its trendy collections is increasingly tapping on its strengths through its Bangalore based factories and despite recession, the company saw 15-20 per cent growth in business. “Being in Bangalore is actually an advantage, as we can do fashion garments and also have the capacity to do volumes at cheaper prices than Delhi and Mumbai,” claims Rajeev Goenka, Director, Go Go International. The company is manufacturing fashion garments for men, women and children.
Relatively newer companies are building their business strategy with product development at the core. Just two decades old, Pradhan Mercantile has balanced its company’s focus on product development and management of its manufacturing operations via cutting edge IT interventions, as its winning strategy. The competitive edge of the company is giving its buyers a complete kidswear product range of woven blouses, tops, dresses, skirts, shirts, nightwear, overalls, knitted tops, leggings and T-shirts, both in knit and woven fabrics, in age bracket of 2 to 14 years and in the infant category between 0 to 23 months.
The size and style assortment capabilities are complemented by the company’s in-house setup for value additions like laser cutting for appliqué work and embroidery. “Product development is a two-way process, which means not only do we follow the guidelines given by the buyers but we also develop our collections and present the same to our buyers, for which we have two designers, one from India and the other from France,” shares Amir Pradhan, Managing Director, Pradhan Mercantile.
The increased focus on value addition has been accentuated by the maturing domestic market manufacturers who are not only creating the infrastructure for value addition, but also training a pool of talent, which never existed in the city before. Arvind has started a centre of excellence 4 months ago, which is a product development wing for all his brands with a team of 75 people mostly technical persons. Reliance too has gone in for a similar division. Women’s wear is fast developing in the region and accessory providers share that the demands for items like lace, ribbons and net, which were always a prime product for the Delhi-NCR region have increased multifold.
The increased focus on ‘value addition’ is also pointed out by technology providers, who claim that apart from IE, Product Development is a growing segment in the region. Unix Stitch Machines, a Surat based manufacturer of embroidery machines with several installations and a dedicated service centre in Bangalore is very upbeat as there is an increasing demand for innovative embroidery solutions in the city. “Earlier many of the value-added needs were outsourced but now companies are investing in in-house capacities to control quality and design,” says Radheshyam Kumawat, Business Development Manager, Unix Stitch Machines.
New locations for manufacturing…
Besides strengthening their product basket, companies are also looking for expansion in capacities and not necessarily in the city. In fact, locations on the outskirts of Bangalore or within Karnataka like Hosur, Bomannasandra, Mandya, Dabaspet, Nelamangala, Chitradurga, Arsikere, Shimoga, Maddur, Malur, Tumkur (Tumakuru), Kanakapura, Kolar, Doddakallasandra, Kengeri and Bangarpet, are developing at a faster pace than the old manufacturing hubs. Leading this charge are many established players. Kanakapura, a town in Ramanagar district, 55 km from the city of Bangalore is an example of how one good factory can pull others to follow. Loveable is the first company to establish units in the area, followed soon afterward by Laguna with a factory spread out in 1,10,000 sq. feet area at Seegekote village (Kanakapura). Now Kanakapura also boasts of factories of Shahi Exports and Page Industries and there is still scope for new units.
One of the basic reasons for shifting is the rising operating costs and competition for labour in the city. Considered one of the stalwarts of the Indian garment exports industry, K Mohan Exports in an effort to expand has been considering the setting up of manufacturing facilities on the outskirts of the city. “Plans are ready in place for expansion, but we have to do our due diligence in terms of selecting the region for a facility as it not only takes time to train the labour and bring them up to the desired efficiency and quality levels, but the size of the population of the area defines sustenance of the project,” says Angie Mahtaney, CEO, K Mohan. The company has plans to shift the production of relatively lower priced and basic products to these facilities while the manufacturing of value-added high-end products will continue in its existing facilities.
These new areas are attracting manufacturers not just because of relatively easier land availability and its cheap price in comparison to Bangalore, but also because of local labour availability and less issues related to workforce, Government zone wise incentives, increasing living cost in Bangalore, good connectivity by road, proper power supply, and reasonable infrastructure in most of the areas. Various incentive schemes have been initiated by State Government to promote industry in the interiors, like investment promotion subsidy, capital subsidy to encourage research & development, exemption from stamp duty, refund of land conversion fine and many more based on zones classified as backward zone, most backward zone, and industrially developed zone. Mandya, Chitradurga, Tumkur, Shimoga districts have benefited from the classification of most backward zone, attracting good incentives. The various incentives offered for setting up a factory in these regions range between 15-20 per cent. From minimum wage point of view, these zones have difference of Rs. 6 to Rs. 10 even in the daily wage of helper which creates big difference in final costing.
Abhishek Kumar, Co-Founder & Principal Consultant of Bangalore based Apparel Consulting & Sourcing Services which is supporting some companies in establishing units in the interiors feels that these zone wise incentive schemes play an important role in the development of upcoming hubs and though it may take few years to show results, the region will definitely attract investors. “Attrition and absenteeism are less in small places compared to Bangalore city which is also a good advantage for these manufacturing units,” says Abhishek.
According to industry watchers, Tiptur (147 km from Bangalore), Mysore (143 km from Bangalore) and Kolar (67 km from Bangalore), which already has a unit of Gokaldas Exports and those of some other companies have good scope for development. Moving beyond the outskirts, factories are coming up in places like Belgaum (500 km from Bangalore) and Sandur (300 km from Bangalore) also. However, it is also seen that the factories coming up in these places are mostly those of domestic players, as exporters require strategic locations to suit both buyer and shipping needs. Sharing his experience of working at Belgaum, K H Mogali, Director, Next Fashion Apparel, which is supplying to many top brands says, “We have no issues regarding labour in Belgaum and we also got 20 per cent refund on whatever investment we made; so we see enough scope in Belgaum despite the fact that it is the second costliest city in Karnataka and quite far from Bangalore.” Belgaum also has a plant of Forbes Campbell Knitwear while its corporate office is in Bangalore. Likewise, Sandur too has a few garment factories like Sujata Garments, which is running a factory of 100 machines working for ITC. The company has its own training centre to train the workers.
Yet, not all companies are convinced that moving out of Bangalore is a good idea, some like Seven Hills International have invested in reasonably sized space in already saturated areas like Peenya, for the advantage that it provides. “It is not easy to sustain a new factory away from a developed manufacturing base as there is much cost, time and effort is required to create trained workforce, while skilled workers are relatively easier to hire in the city, and though they may cost more in terms of wages, they give better efficiencies and are more attuned to the requirements of the industry,” reasons Keshav Anand, Owner, Seven Hills International. Adding to the line of thought, Vineet Saraogi, Director, Mittal Clothing, who is very sure that his expansion will be within the city argues, “How do we create an eco-sphere where there is at hand all the outsourcing options that go into manufacturing, from ancillary companies supplying trims and accessories to washing and logistics. One has to be very self-sufficient to sustain in isolation.” Then of course there are issues of middle management and other administrative challenges.
For some, it makes logical sense that instead of going too far away from Bangalore, to move to a different state for a fresh start. Many companies are now exploring border states of Karnataka like Tamil Nadu and Andhra Pradesh. Hindupur, located in Anantapur district of Andhra Pradesh, is the second largest city after Hyderabad and a mere 100 km from Bangalore; this city with a fully developed SEZ has attracted investments from companies like Texport Garments and Nuvo Craft (started here 1.5 years before).
Moving further beyond, Orissa seems that a hotspot for investment today and Shahi, after fully exploring the opportunities in Karnataka has recently made a move to establish a unit in the state. A study done by StitchWorld, analyzing 113 locations across India to determine the competitiveness of any location for running a garment manufacturing factory and/or exporting unit, showed that Bhubaneswar in Khordha, a district in Orissa, has the highest Apparel Sourcing Index as it offers a good infrastructure and logistics are also taken care of, while Welspun Anjar SEZ Limited, in village Chaudwar, Cuttack, Orissa comes out to be the second best location for both manufacturing and sourcing. “If I look at where Madura should take its manufacturing next to achieve my targets set for 2020, Orissa seems to be the best option,” concludes Lal Sudhakaran, Head – Manufacturing & MGE, Madura Garments.
